Business Context and Reporting Period
The filing is a Form 10-Q for the quarter ended September 30, 2013, filed by Brick Top Productions, Inc., a Florida development-stage company. The company owns 60% of York Productions, LLC and had not commenced its planned principal operations of producing motion pictures. Its business plan depended on marketing the “Doorman” pilot and acquiring additional film rights.
The request metadata identifies the company as Fubotv Inc.; however, the filing text identifies the registrant as Brick Top Productions, Inc. This discrepancy should be verified.
Key Financial Metrics
| Metric | Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | Prior Comparable Period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating expenses | $47,063 | $109,676 | $58,865 and $108,215, respectively |
| Net loss attributable to company stockholders | $47,088 loss | $110,877 loss | $58,865 loss and $108,215 loss, respectively |
| Net cash used in operating activities | Not separately provided | $125,685 | $84,080 |
| Net cash provided by financing activities | Not separately provided | $253,050 | $34,797 |
| Cash at period end | Not separately provided | $130,519 | $4,277 |
- Total assets were $428,687 at September 30, 2013, including $292,931 of capitalized pilot costs and $130,519 of cash.
- Total liabilities were $230,385, consisting primarily of $169,538 of accrued expenses and $60,847 of unsecured, non-interest-bearing advances from a stockholder due on demand.
- Working capital was negative $99,866.
- Accumulated development-stage deficit was $1,078,736. No income tax provision was recorded.
- Basic and diluted loss per share was reported as $0.00 loss because of rounding; weighted-average shares were 29,709,984 for the nine-month period.
- No meaningful operating margin was generated because the company had no revenue. The filing does not provide a useful revenue-based margin.
- There was no conventional bank debt reported, but the company had accrued liabilities and related-party advances.
Material Changes Versus Prior Comparable Period
- Quarterly net loss attributable to stockholders declined to $47,088 from $58,865, primarily because of lower professional fees.
- Nine-month net loss increased to $110,877 from $108,215 according to the financial statements. The MD&A contains an inconsistent comparison that states the prior-period loss was $108,191.
- Nine-month operating cash use increased to $125,685 from $84,080.
- Financing proceeds increased substantially to $253,000 from stock sales, compared with $35,000 in the prior-year period, producing a $127,365 increase in cash during the first nine months.
- Cash increased from $3,154 at December 31, 2012 to $130,519 at September 30, 2013, while total equity increased from $56,247 to $198,302.
- The company issued 253,000 shares during the first nine months for approximately $253,000 of gross cash proceeds. During the third quarter, it sold 118,000 shares for $118,000 to nine accredited investors under a Section 4(2) exemption.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Management stated that future revenue depended on effectively marketing the “Doorman” pilot and completing viable acquisitions of film rights; no quantitative revenue or earnings guidance was provided.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern. Continued operations depend on implementing the business plan, generating revenue, and raising additional capital.
- The company reported recurring operating losses, negative working capital, and no committed third-party financing. Management stated that officers and shareholders had not agreed to provide additional financing.
- The CEO had waived future base salary since October 2011, although the company had previously accrued unpaid salary under the employment agreement. The filing does not clearly state the total accrued salary obligation separately from accrued expenses.
- The $292,931 of capitalized pilot costs will not be amortized until the film is released and related revenue is recognized. These costs are subject to recoverability and impairment risk.
- Disclosure controls and procedures were determined to be ineffective as of September 30, 2013.
- No legal proceedings or off-balance-sheet arrangements were reported. Market-risk disclosures were marked not applicable.
- Subsequent to quarter-end, the company sold an additional 78,500 shares for $78,500 during October 2013.
Most Important Facts for Investors to Verify
- Confirm the correct issuer identity, because the supplied metadata names Fubotv Inc. while the filing names Brick Top Productions, Inc.
- Verify the company’s ability to raise additional capital and fund operations given the going-concern warning, negative working capital, and absence of committed financing.
- Assess the recoverability and commercial prospects of the $292,931 capitalized “Doorman” pilot costs.
- Reconcile the inconsistent prior-period nine-month net-loss figure in MD&A ($108,191) with the financial statements ($108,215).
- Review the ineffective disclosure controls and any remediation undertaken after the filing.
- Verify the terms, exemption compliance, dilution impact, and ownership concentration associated with the 2013 equity issuances.
- Determine the amount and settlement expectations for accrued expenses and stockholder advances, including any unpaid compensation.